After a bearish government announcement on jobless claims, the municipal market has struggled to gain footing throughout the afternoon. Traders said most activity is in the primary market.
"After that report came out, Treasuries were off, and a weaker tone has come across the market," said one trader in New York. "We started the day on the wrong foot, we're not seeing the flow we have the past couple of weeks."
On Wednesday, Federal Reserve Chairman Ben Bernanke spoke to the House Financial Services Committee about the Fed's current monetary policy, prompting some buying and firming of yields in the municipal market. He repeated his testimony to the Senate Banking Committee Thursday. Earlier Thursday, the government said jobless claims fell by 24,000 to 334,000 in the week ending July 13.
"There's not a radio silence," said another trader in New York. "The market feels a little bit weaker, but there are enough people that realized how cheap the market is and because of that it's got a little bit of a pulse. Not everybody is cutting and running."
Another trader said the market felt light turbulence after the claims report but didn't react in a significant way. One trader said retail buyers were providing support to the market.
"With retail it's more rates-driven, and they're still finding opportunity in rates," he said.
Treasury yields on the long end of the curve continued to climb slightly from this morning, with the benchmark 10-year yield up three basis points from the end of day Wednesday to 2.53%. The two-year yield remained steady at 0.31%, while the 30-year yield climbed five basis points to 3.62%.
Even with a heavy calendar earlier in the week, new offers emerged this afternoon, including the institutional pricing of Miami-Dade County water and sewer system revenue refunding bonds. The Morgan Stanley-managed deal was priced for retail Wednesday.
The institutional pricing of $492.6 million bonds saw yields gaining slightly from the retail pricing. The bonds are rated Aa3 by Moody's, A-plus by Standard & Poor's and A-plus by Fitch. In the first series, $340 million of water and sewer system revenue bonds, ranged from 4.47% with a 5.00% coupon in 2030 - up five basis points from yesterday's pricing - to 4.84% with a 5.00% coupon in 2042. The bonds are callable at par in 2022.
In the second series, $152.6 million of revenue refunding bonds, yields ranged from 4.15% with a 5.00% coupon in 2027 to 4.29% with a 5.25% coupon in 2029. The bonds are callable at par in 2023.
In other negotiated deals, Citi brought to market $449 million of San Francisco International Airport revenue bonds in two series. The bonds are rated A1 by Moody's, and A-plus by S&P and Fitch ratings.
Yields in the first series, $361 million of bonds, ranged from 2.82% with a 5.00% coupon in 2020 to 5.05% with a 5.00% coupon in 2038. The yields were slightly lower than in pre-market pricing, down as much as 51 basis points in the case of 5.50%-coupon bonds maturing in 2027. Bonds maturing in 2027 are callable at par in 2018.
The second series of $87.9 million bonds were offered at a yield of 4.85% with a 5% coupon in 2043. Both series of bonds are callable at par in 2023.
Loop Capital Markets priced for retail $332.2 million of Bexar County, Texas, combination tax and revenue certificates of participation. The bonds are rated Aaa negative by Moody's, AA-plus by Standard & Poor's and AAA by Fitch.
Yields ranged from 0.83% with a 2.00% coupon in 2016 to 4.40% with a 5.00% coupon in 2043. The bonds are callable at par in 2023.
Tax-exempt yields that began Thursday mostly unchanged saw slight volatility, according to MMD. Yields were steady between one and four years. Those with yields between five and six years fell as much as two basis points, while yields between seven and eight years were steady. Yields climbed as much as two basis points from nine years and on.
